Question

Ch 6 - Please back up your point of view with a citation so its credible.

1. Has industrial policy contributed significantly to countries’ economic growth? Explaining by referring to Japanese experience.

2. Explain how advocates of strategic trade policy differ from the classical free traders in their treatment of externalities?

Answer 1

Yes industrial policy contributed significantly to Japan's economic growth.

After world war II, Japan has implemented complex industrial policies for Japanese economy's growth.

Japan has removed import quotas, increase in labour productivity through reduction in input cost, shift to high productivity industries, shift to knowledge based and high technology industries in the late 1980's.

Japan has deliberately shifted to high productivity industries in order to increase labour productivity and this has increased the total factor productivity and contributed to Japan's industrial growth.

Removal of import quotas also contributed significantly in increasing the productivity of Japanese industries and this has increased the productivity of Japanese industries.

Japan has mainly focused on industries- Iron, Steel, Merchant Marine , Machine industries, shipbuilding, heavy electrical equipment, chemicals, Nuclear Power, Petrochemicals, automobile industry, robotics and support to research and development and high technology products and this has contributed to shift to high labour productivity sector and rapid industrial growth of Japanese industries.

Japan has less number of natural resources so for its economic growth it has to export for financing its imports and Japan has done it significantly by focusing on high productivity, high technology and knowledge based industries and through development of its banking and financial industry.